Obama tax compromise for infrastructure risks roadblocks

Wednesday, July 31, 2013

President Obama's offer Tuesday to break the fiscal gridlock over debt and budget issues by agreeing to corporate tax reform in exchange for a one-time injection of money for infrastructure improvements received a chilly reception from Republican leaders in Congress.
Speaking at an Amazon.com fulfillment center in Chattanooga, Tenn., Obama laid out his latest plan for stimulating the manufacturing sector and the creation of good-paying middle class jobs. The president repeated his previous position on simplifying corporate taxes, saying Congress should end incentives for companies that outsource work overseas, provide tax credits for companies that set up plants and create domestic jobs, lower taxes for manufacturers and small businesses. Congress should package those pro-business measures with funding for infrastructure that would provide jobs for construction workers and increase job training at community colleges, he said, in a reprise of his proposed American Jobs Act of two years ago, which called for an immediate $50 billion investment for infrastructure.
He also asked Congress to triple the number of regional institutes for manufacturing innovation from 15 to 45 so the United States can "be at the forefront of the next revolution of manufacturing." He proposed the network of high-tech manufacturing hubs in early 2012 and Congress funded a pilot program to help manufacturers with start-up investments. Under the program, industry, universities, community colleges, federal agencies, states and local governments collaborate to accelerate innovation by investing in industrially-relevant manufacturing technologies with broad applications to bridge the gap between basic research and product development, provide shared assets and ideas to help companies - especially small manufacturers - access sophisticated technology and equipment, and create a top teaching and training environment for advanced manufacturing skills.
"I'’ve told Republicans that if they’re serious about a balanced, long-term fiscal plan that replaces harmful budget cuts that... that prevents... 900,000 jobs from being lost, that helps grow the economy, that helps the middle class, I am ready to go. But we can't lose sight of our North Star. We can’t allow an impasse over long-term fiscal challenges to distract us from what the middle class needs right now. So here’s the bottom line: If folks in Washington really want a grand bargain, how about a grand bargain for middle-class jobs?" Obama said.
It was Obama's third speech in a week as he goes around the country trying to gain support for a middle-class economic agenda that the White House hopes will pressure congressional Republicans to compromise on tax and spending policies that have resulted in legislative gridlock. On Friday, Obama visited the Port of Jacksonville where he made the case for investment in ports and the continuing need to speed up delivery for a variety of projects.
"But if we’re going to give businesses a better deal, then we're also going to have to give workers a better deal, too. I want to use some of the money that we save by closing these loopholes to create more good construction jobs with infrastructure initiatives that I already talked about. We can build a broader network of high-tech manufacturing hubs that leaders from both parties can support. We can help our community colleges arm our workers with the skills that a global economy demands," Obama continued.
"All these things would benefit the middle class right now and benefit our economy in the years to come.So, again, here’s the bottom line: I’m willing to work with Republicans on reforming our corporate tax code, as long as we use the money from transitioning to a simpler tax system for a significant investment in creating middle-class jobs. That’s the deal."
Obama said the infrastructure investment, which is considered a form of economic stimulus by many, should be concentrated on repairing existing road, sea, air and other facilities the nation depends on to move goods. The "Fix-it-First" program he laid out in the State of the Union address in February renewed his proposal for Congress to approve $50 billion for infrastructure, with $40 billion to be spent on urgent repairs for aging infrastructure, including 70,000 structurally deficient bridges, and $10 billion to capitalize an infrastructure bank.
"I look at this amazing facility and you guys, you don't miss a beat. I mean, you've got these packages coming out. You've got dog food and Kindles and beard trimmers. I mean, there's all kinds of stuff around here. But once it's packed up, it's got to get to the customer," he told the Amazon workers. "And how quickly and how dependably it gets to the customer depends on do we have good roads, do we have good bridges, do we have state-of-the-art airports.
"We've got about $2 trillion of deferred maintenance here in this country. So let’s put more construction workers back on the job doing the work America needs done. These are vital projects that Amazon needs, businesses all across the country need, like widening Route 27 here in Chattanooga and deepening the Jacksonville Port."
He also repeated his call for the federal government to build partnerships with the private sector and local governments to rebuild highways, the aviation system, the electrical grid, schools and other foundations of the economy.
Obama said he's asking Congress to renew the executive branch's expired trade promotion authority for the freedom to negotiate trade deals without interference from Congress so the nation can further increase exports.
"I appreciate the president drawing attention to these important issues. However, continuously recycling old ideas offers little substance in moving forward to address our nation’s infrastructure needs," Rep. Bud Shuster, chairman of the House Transportation and Infrastructure Committee, said in a statement.
Sen. Minority Leader Mitch McConnell was even more blunt in his response on the Senate floor.
Obama's plan is "just a further-left version of a widely panned plan he already proposed two years ago - this time with extra goodies for tax-and-spend liberals. . . . The tax hike it includes is going to dampen any boost businesses might otherwise get to help our economy. In fact, it could actually hurt small businesses. And it represents an unmistakable signal that the President has backed away from his campaign-era promise to corporate America that tax reform would be revenue neutral to them." - Eric Kulisch